Bombay HC ruled deputy registrar cannot disqualify managing committee for non mandatory procedural lapses in housing society redevelopment projects

Time of India

2 days ago

MUMBAI: The Bombay high court on June 9 ruled that the deputy registrar has no power to disqualify the entire managing committee based on alleged procedural lapses by the committee of a govt resolution of 2019, which was not mandatory in nature.
The GR prescribed procedural safeguards to be observed by cooperative housing societies while undertaking redevelopment projects.
Justice Amit Borkar, pronouncing the judgment on the first day of the court resuming after the summer vacation, also directed the State Principal Secretary (Co-operation), to appoint an officer "of appropriate rank and integrity to conduct a comprehensive and impartial inquiry into the role and conduct" of the deputy registrar, within eight weeks and to submit a compliance report before it.
The inquiry is for the officer having ignored binding precedents and passing orders without hearing members, the HC ruled. The Judge said, 'There is a grave risk that arbitrary actions of this nature may encourage undesirable practices, including possible nexus between vested private interests and certain regulatory officers. This may result in manipulation of redevelopment projects or society affairs for personal or commercial gain, in disregard of the welfare of the society members.
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The HC set aside the disqualification of the managing committee members and the appointment of an administrator for a Bandra society. The HC held that the Registrar, despite definitive binding rulings of the court in the past which held the GR to be recommendatory, not mandatory in nature, attempted to justify the disqualification by terming the facts distinguishable. '
'The officer disqualified the members without adhering to minimum procedural fairness,' Justice Borkar held.
'Such actions, if permitted to continue without proper judicial scrutiny, may cause serious harm to the purposes of the cooperative movement,' the HC held, adding, 'When statutory authorities interfere with the functioning of duly elected managing committees without following due process or without sufficient legal basis, it not only weakens the democratic foundation of cooperative societies but also creates an atmosphere of fear and uncertainty among office bearers and members.
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The very object and scheme of the MCS Act, which is to promote transparency, accountability, and self-governance among cooperative societies, stands defeated if statutory powers are exercised to undermine duly elected bodies rather than to support and guide them.
The HC underscored how the 'very spirit of cooperative governance lies in the principle of democratic decision-making and collective management by members.
If elected committees can be removed or destabilised on vague or insubstantial grounds, it would amount to indirect interference in the choice of the members who have exercised their statutory right to elect their representatives. Such interference cannot be allowed unless it is clearly supported by law and necessary to prevent actual and proven mismanagement or misconduct.
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'Once this Court has authoritatively held that the directions in the form of GR of 2019 under Section 79A (of the Maharashtra Cooperative Societies Act) are directory, failure to follow directory provisions does not attract penal consequences,' Justice Borkar held, offering relief to the managing committee members who petitioned the HC against the Deputy Registrar of Cooperative Societies, 'H-West' Ward, Mumbai, and nine others, including the Bandra cooperative housing society.
The HC agreed with arguments of Mayur Khandeparkar counsel for the members that the disqualification flouted basic principles of natural justice, as they were issued no notice and given no chance to be heard. Besides, he contended there was sufficient compliance of the GR and argued that the deputy registrar demonstrated bias in favour of the complainants by invoking Section 79H(3) of the MCS Act, which stood repealed and had no applicability.
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Girish Godbole, senior counsel for the complainants, said the disqualification was justified and, in any case, they had already challenged the deputy registrar's order under the Act before the higher authority, and the HC ought not to intervene at this stage. Godbole argued that while a Registrar has no power to annul resolutions of the general body, he retains the jurisdiction under Section 79A(3) to disqualify members of the managing committee for breach of certain directives.
The HC, found that the members made out a 'strong prima facie case' of violation of natural justice as they had 'no fair opportunity to be heard before such serious consequences were imposed.' The issue raised 'goes to the root of natural justice, jurisdiction, and legal propriety,' said Justice Borkar, and noted that when viewed in its entirety, the matter 'reveals a troubling pattern.'
The six managing committee members assailed the legality of three separate but interrelated orders of the dy registrar passed in February 2025 under the provisions of Maharashtra Cooperative Societies Act, 1960, disqualifying them for six years.
They also challenged a Feb 20 appointment of an officer for the society's affairs.
The building's former managing committee had initiated steps for redevelopment of the society property and tenders were invited. But allegations of mismanagement surfaced and in Nov 2023 an administrator was appointed for the society.
In august 2024 elections were held and a new managing committee was voted in. The new committee continued the redevelopment plans. In November 2024 the deputy registrar received two complaints from society members objecting to the redevelopment process by the new committee, alleging that shortlisting voting process held last October flouted directives in the 2019 GR.
The HC directed that on conclusion of the inquiry, a detailed compliance report setting out the findings and action taken, if any, shall be filed before it by August 25. The HC rejected a request made by the State to stay its order.